Do I need to go back to work?

[pacergal]

This link may help...

http://www.early-retirement.org/for...-answer-before-asking-can-i-retire-69999.html

Welcome to the forum.

Answering these questions was what really helped me decide if we were ready to retire. Plus running firecalc with multiple scenarios.

It sounds a too close for me, but you are the one who knows your true spending budget. Almost 2 years severance pay does give you some time to drill down on your plans.

Welcome!

 

[unixfreak]

Thanks so much for the responses. There's a lot of food for thought. I agree with heeding the warnings of the 73%. As was mentioned, I do have some time on my side. I don't have to make any decisions in the next - even few months. I am in the mode of preparing though. I don't have much in savings because I've been hammering my mortgage; there's only 16k.... but at this point I'm able to sock away up to a couple of grand a month with such low outgo.

 

[ivinsfan]

Thanks so much for the responses. There's a lot of food for thought. I agree with heeding the warnings of the 73%. As was mentioned, I do have some time on my side. I don't have to make any decisions in the next - even few months. I am in the mode of preparing though. I don't have much in savings because I've been hammering my mortgage; there's only 16k.... but at this point I'm able to sock away up to a couple of grand a month with such low outgo.

Stop with house paydown, if you need to go on ACA you'll need every penny of that prepay money to live on. Hammering your mortgage is the house paid off or not.

So you work a regular job and a side job and does your DW bring in money? You have 16k non-retirement? Your not ready, you need to spend more time educating yourself about spending in retirement. What's your low outgo? Why don't you try laying out your plan a little more clearly. Start with the thing almost everyone has asked about, How much is your annual spend?

 

[unixfreak]

Stop with house paydown, if you need to go on ACA you'll need every penny of that prepay money to live on. Hammering your mortgage is the house paid off or not.

So you work a regular job and a side job and does your DW bring in money? You have 16k non-retirement? Your not ready, you need to spend more time educating yourself about spending in retirement. What's your low outgo? Why don't you try laying out your plan a little more clearly. Start with the thing almost everyone has asked about, How much is your annual spend?

No. My wife doesn't bring any money in at this time.

That's right. I have 16k in liquid assets.

That's what I'm doing here is spending time. Maybe I should have started educated myself earlier. I only just in the past few weeks found that I'm a candidate for the company's voluntary separation program. I am spending even more time on reading and doing the very thing you suggest: educating myself.

Why stop with the house paydown? It's about to roll into a 0% apr for a year credit card. I claim the standard deduction on my taxes so now I'm interest free on my home which will pay off within a year.

I absolutely plan to tap into more freelance as i have plenty of connections in my industry of work.

My annual spend is 42k.

 

[nhcycling]

You really need a detail account of your expenses for an extended period of time. And plan for some future large unexpected items - example, new roof. Can’t really say if you’ll be okay. Not a luxurious retirement but you could end up struggling financially.

Who really knows where healthcare is headed in the next 5-10 years and what’ll cost - it could be and is for some a very large monthly expense.

Does your wife have a full time job with health insurance? If not could she consider finding one?

 

[ivinsfan]

No. My wife doesn't bring any money in at this time.

That's right. I have 16k in liquid assets.

That's what I'm doing here is spending time. Maybe I should have started educated myself earlier. I only just in the past few weeks found that I'm a candidate for the company's voluntary separation program. I am spending even more time on reading and doing the very thing you suggest: educating myself.

Why stop with the house paydown? It's about to roll into a 0% apr for a year credit card. I claim the standard deduction on my taxes so now I'm interest free on my home which will pay off within a year.

I absolutely plan to tap into more freelance as i have plenty of connections in my industry of work.

My annual spend is 42k.

Your original post said your house was paid off and you had no debt. What is rolling into a 0 apr on a CC..I can't follow what you saying.

If you want to take advantage of a cheap ACA plan you will need after tax money to supplement your part time earnings. If you start pulling money out of your 401, it's taxable and might put you over the income limits.

 

[REWahoo]

FireCalc said that I have a 73% chance of success. 32 of the 119 cycles failed.

This tells me the answer to your thread question is "Yes".

 

[unixfreak]

Your original post said your house was paid off and you had no debt. What is rolling into a 0 apr on a CC..I can't follow what you saying.

If you want to take advantage of a cheap ACA plan you will need after tax money to supplement your part time earnings. If you start pulling money out of your 401, it's taxable and might put you over the income limits.

Sorry ... I am getting a one time payoff for the unused PTO upon departure from work. That will pay it off.

 

[euro]

Sorry ... I am getting a one time payoff for the unused PTO upon departure from work. That will pay it off.

OK, that makes sense then, so your house will be paid off when the severance period starts.
One thing to consider about that: see if you can get a HELOC on the house before your job ends - this is a line of credit that you don't have to use if you don't want to, but is basically readily available cash in case of an unexpected need. It'll be very easy to qualify for now, but very hard, once you don't have a W2.

 

[unixfreak]

OK, that makes sense then, so your house will be paid off when the severance period starts.
One thing to consider about that: see if you can get a HELOC on the house before your job ends - this is a line of credit that you don't have to use if you don't want to, but is basically readily available cash in case of an unexpected need. It'll be very easy to qualify for now, but very hard, once you don't have a W2.

Actually I do have a HELOC which is part of the 12k balance on the mortgage.

 

[ivinsfan]

Actually I do have a HELOC which is part of the 12k balance on the mortgage.

OK you have a HELOC on your home so at one point you borrowed against your home equity. You are using a part of your severance package to pay this off.

Your numbers do not add up for you to stop working however, if you can get a job instead of using up all your severance weeks for living expenses, in a few years you will be in a better position.

 

[HI Bill]

Your numbers do not add for you to stop working however, if you can get a job instead of using up all your severance weeks for living expenses, in a few years you will be in a better position.

Agree. There is no contingency for anything unexpeceted, including long term care, or emergency house repairs, etc. I would work a few more years.

 

[badatmath]

Is that your after tax spend rate? How much did you budget for health insurance?

 

[MarieIG]

Yes. Plan looks shaky for you and worse for you wife.

 

[Dtail]

This tells me the answer to your thread question is "Yes".

+1
No retirement calculator is perfect, but would not retire with a 73% success rate.

 

[RetiredAt55.5]

You really need a detail account of your expenses for an extended period of time. And plan for some future large unexpected items - example, new roof. Can’t really say if you’ll be okay. Not a luxurious retirement but you could end up struggling financially.

With both the OP and his wife in their 50's, also budget for increased healthcare expenses for deductibles, copays, prescriptions, etc. Dental expenses too - sucks getting old.

From what I've seen in my ACA market, a lot of the plans have high deductibles (especially if you don't want to choose an HMO plan).

I also second the recommendation to STOP paying down the mortgage if you want to have the option of managing income to get ACA subsidies.

 

[aaronc879]

If it was just you I would say go for it. With the wife being so much younger, that makes things tricky. Is she employable if needed? Could she do a side gig as well? If not, then you may want to work longer to ensure she can have a retirement after you are gone.

 

[unixfreak]

My expenses are obviously different now than they will be when I draw my last paycheck which will be in another 2 years. I suppose it should be mentioned that I make 150k per year including my freelance gig which is 16k (which will continue). The consensus seems to be go back to work. If I go back and do free lance, and could possibly do quite well, I'm still going to be getting 1099s.

I have some time on my side, and can also be somewhat choosy (I think) about what I do.

 

[unixfreak]

With both the OP and his wife in their 50's, also budget for increased healthcare expenses for deductibles, copays, prescriptions, etc. Dental expenses too - sucks getting old.

From what I've seen in my ACA market, a lot of the plans have high deductibles (especially if you don't want to choose an HMO plan).

I also second the recommendation to STOP paying down the mortgage if you want to have the option of managing income to get ACA subsidies.

My mortgage is basically 1k per month. I have been paying 1500 when I say I've been paying it down. Once it's on the credit card, I'll be paying the 1k to the card for a year. If I were to put that money somewhere else, where would it go?

 

[RetiredAt55.5]

My mortgage is basically 1k per month. I have been paying 1500 when I say I've been paying it down. Once it's on the credit card, I'll be paying the 1k to the card for a year. If I were to put that money somewhere else, where would it go?

I missed the posts where it was mentioned that you were about to put it on a credit card (I guess so the interest rate would be 0% on the CC). I didn't see what your current interest rate is. Assuming it's reasonably low, and assuming you were interested in retiring and getting a subsidized ACA plan, that could save you thousands (as much as $10K or $20K per year). As you can see, it could be a LOT more than what you'd save even compared to getting 0% leveraging your credit card to pay down your mortgage bill.

To put it in perspective, I was eligible to continue on my former employer's health care plan (both Cobra and post Cobra). My cost for the 4 of us (myself, spouse, and 2 college aged children) was about $24K for Cobra and $30K post Cobra. Taking the children off would've reduced those about $8K. Health insurance is expensive. This is why a lot of people continue working just for the health insurance.

To answer your question about where to put the extra money, it would be something safe, like short term CD's or a FDIC insured money market account. Something you could tap as needed for expected or unexpected expenses without worrying about the stock market fluctuations. The key to getting ACA subsidies is managing your income so you stay below the ACA subsidy cliff. If you hit the cliff because you need too much income to pay all your bills, you get $0 as your subsidy (and have to repay for the entire year any subsidy they have already given to you).

 

[mh]

Cobra will only go 18 months, that's right. I thought I said until 62ish ... after that, I have to find health insurance.

FireCalc said that I have a 73% chance of success. 32 of the 119 cycles failed.

If it was me , those numbers are not good enough. I would keep working ... it’s always going to be way easier to keep going now than to find work years later after you’ve been out of the work force for a while.

 

[unixfreak]

I missed the posts where it was mentioned that you were about to put it on a credit card (I guess so the interest rate would be 0% on the CC). I didn't see what your current interest rate is. Assuming it's reasonably low, and assuming you were interested in retiring and getting a subsidized ACA plan, that could save you thousands (as much as $10K or $20K per year). As you can see, it could be a LOT more than what you'd save even compared to getting 0% leveraging your credit card to pay down your mortgage bill.

To put it in perspective, I was eligible to continue on my former employer's health care plan (both Cobra and post Cobra). My cost for the 4 of us (myself, spouse, and 2 college aged children) was about $24K for Cobra and $30K post Cobra. Taking the children off would've reduced those about $8K. Health insurance is expensive. This is why a lot of people continue working just for the health insurance.

To answer your question about where to put the extra money, it would be something safe, like short term CD's or a FDIC insured money market account. Something you could tap as needed for expected or unexpected expenses without worrying about the stock market fluctuations. The key to getting ACA subsidies is managing your income so you stay below the ACA subsidy cliff. If you hit the cliff because you need too much income to pay all your bills, you get $0 as your subsidy (and have to repay for the entire year any subsidy they have already given to you).

One of the reasons for the credit card was to help my credit. It had dropped down to 770 from 820 because I had a lack of active trade lines. Last year I paid 1k in interest so I can at least save that.

I'll have to look into that ACA cliff.

 

[Sunset]

One of the reasons for the credit card was to help my credit. It had dropped down to 770 from 820 because I had a lack of active trade lines. Last year I paid 1k in interest so I can at least save that.

I'll have to look into that ACA cliff.

You never have to pay interest to increase credit score. I have a credit score about 810 , I have not paid a dime of interest in over 10 years.

I do have about 8 credit cards and use 3-5 of them pretty regularly as my main ones. Example one is for gas (because it give a high reward for gas), another is for restaurants (again because of the high reward points on that expenditure).

So basically you wasted $1,000 paying interest.

 

[Sunset]

My expenses are obviously different now than they will be when I draw my last paycheck which will be in another 2 years. I suppose it should be mentioned that I make 150k per year including my freelance gig which is 16k (which will continue). The consensus seems to be go back to work. If I go back and do free lance, and could possibly do quite well, I'm still going to be getting 1099s.

I have some time on my side, and can also be somewhat choosy (I think) about what I do.

So you make and spend most of the $166K per year. The change to retire on about 1/4 of that is going to feel pretty crappy...

You should live on the $40K now, to see what it's like and save the rest for retirement. A dry run could be very revealing to you.

 

[unixfreak]

You never have to pay interest to increase credit score. I have a credit score about 810 , I have not paid a dime of interest in over 10 years.

I do have about 8 credit cards and use 3-5 of them pretty regularly as my main ones. Example one is for gas (because it give a high reward for gas), another is for restaurants (again because of the high reward points on that expenditure).

So basically you wasted $1,000 paying interest.

I don't care for credit cards... that's just my preference. I've not had one in over 15 years.

As for the 1000 dollars ... that's only one year. I've been in my house for 20.